Govt & Central Bank is in discussions over stalled real estate projects. -

Govt & Central Bank is in discussions over stalled real estate projects.

The Centre is taking swift action to address concerns about stalled real estate projects, which pose risks to both homeowners and lenders. According to two sources, the government is holding regular discussions with bankers and Reserve Bank of India (RBI) officials on the subject.

Despite the success of the Centre’s Special Window for Affordable and Mid-Income Housing (SWAMIH) investment fund in reviving various projects, government officials say more action is required. SWAMIH, which was founded in 2019, aims to facilitate the completion of troubled residential projects.

The SWAMIH Investment Fund I, managed by State Bank of India’s SBICAP Ventures, has assisted in the completion of 20,557 units in the last four years and plans to hand over another 81,000 homes in 130 projects across 40 tier 1 and 2 cities once approvals are in place, according to one of the officials who spoke on the condition of anonymity. According to the official, the fund has completed the entire cycle of evaluation, investment, building, and successful redemption of 11 projects.

The Centre is particularly worried about the risks that lenders face as a result of unfinished projects. After years of cleaning up, Indian banks have been able to get rid of the majority of huge toxic assets, freeing up bandwidth for disbursing new loans rather than worrying about bad loan recoveries.

If these halted projects expose them to more stressed assets, they will have to continue efforts to collect the loans, especially because the inventory of abandoned projects is more than a handful, according to the first individual. According to data from real estate services business Anarock, India’s top seven cities have 479,940 stranded or delayed housing units worth more than 4.5 trillion as of May 2022. While the National Capital Region (NCR) and the Mumbai Metropolitan Region (MMR) accounted for 77% of all delayed or blocked projects, Bengaluru, Chennai, and Hyderabad accounted for 9%.

The latest meetings are part of the government’s drive to push unfinished projects to completion. Indeed, the housing and urban affairs ministry has formed a 14-member committee chaired by former NITI Aayog chief executive Amitabh Kant to investigate stalled real estate projects and offer measures to complete them, according to news agency PTI on 4 April.

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